One should never let a good crisis go to waste. The automotive depression of 2008 to 2010 enabled substantial restructuring of the North American automotive footprint, which spilled over to other regions. A key shift—already underway before last decade’s demand implosion—was the shift to global vehicle and engine platforms. The Japanese, Koreans and most of the Europeans already subscribed to this “less is more” philosophy to cover their global requirements, choosing not to reinvent the wheel when expanding to a new region.
Several examples of global platforms have been publicized by OEMs including Toyota’s MC, VW’s MQB and now the Renault/Nissan CFM2. These efforts all tout the same advantages: speed, cost, flexibility and, ultimately, profitability. OEMs are striving for the 70:30 ratio as regards both their product offerings as well as their production focus. That is, 70% of the world’s volume is in B-, C- and D- segments and they want to have 70% of their platforms deployed globally. Let’s face it: although there are global A-segment and compact pickup platforms, the rubber meets the road in the high-volume, unibody B-, C- and D-segments. Those other segments are only about 30% of the overall volume. What’s more, the goal the OEMs have as regards their production footprint is to have 70% of their facilities globally integrated and 30% regional in scope.
Proving that the industry is evolving, the idea of a global vehicle platform has morphed over the past decade. While common dimensions (especially with track width) have long been held up as the holy grail of a common platform, other factors are growing in importance. The ability to “commonize” systems such as electrical, safety, cockpit, seating structure, fuel system, suspension layout, engine/transmission packaging, and engine box dimensions are paying dividends down the line.
Suppliers benefit as global scale rises and the breadth of a platform expands to larger and smaller segments. Several of these systems can be utilized in other platforms—larger or smaller—with few changes, thereby bolstering economies of scale. System sharing is an enabler to deliver new technologies across several vehicles more quickly than in the past, when there was little build or system commonality between platforms.
Additionally, utilizing a common build process allows OEMs to “shingle” the vehicle in a single format, allowing for enhanced flexibility at the plant level. If an OEM is out of capacity in one region, the ability to quickly tool in another region to bolster supply is available because the build process is the same. In the old “silo” days of Ford and General Motors, the regionalism that pervaded product design never allowed for multi-region sourcing of a vehicle. Now, it is a brave new world with greater production flexibility on a global scale.
Of late, several OEMs have graduated beyond global platforms to global architectures. Taking the component/system and build process commonization efforts to the next level, OEMs, to varying degrees, are looking to the future. Both initiatives are structured to lower development costs through the insertion of modules and systems into a structure to yield vehicles of differing body styles and dimensions while leveraging the same build process. Through these efforts, fewer suppliers are utilized, which has the effect of reducing OEM overhead costs.
As global diversification becomes the long-term stability rallying cry, OEMs around the world need to emulate the actions of modularity leaders VW and Renault/Nissan. Once, being “global” essentially meant little more than having an address in every country. Now it is an essentially competitive strategy.
Michael Robinet has been a managing director of IHS Automotive Consulting since 2011. Prior to that, he was the director of Global Production Forecasts for IHS Automotive. His areas of expertise include global vehicle production and capacity forecasting, future product program intelligence, platform consolidation and globalization trends, trade flow/sourcing strategies, and OEM footprint/logistics trends.